Fresh Del Monte's UK arm has undergone a certain amount of reorganisation since the beginning of the year, following the departure of the former managing director Peter Miller and the decision not to renew a major banana contract with supermarket chain Asda.
However, the company's new managing director as of 8 April, former finance chief James Harvey, insists it's business as usual for the company as it looks to reinforce the market standing of arguably the most famous fruit brand in the UK. In an exclusive interview, Fruitnet talks the the group's new UK boss about his plans to take the company forward.
Fruitnet: As the new managing director of Fresh Del Monte UK, what do you hope to achieve during the next 12 months and what kinds of developments do you envisage for the company over the next three years?
JH: The Del Monte brand has the highest consumer recognition of all fresh produce brands and I want to make sure that this message is reinforced to all our existing and potential customers so they fully recognise the benefits of working with Del Monte UK, In three years time, I want Del Monte to be the clear partner of choice, whether that is for whole fruit or prepared fruit. I want us to be known not only for the quality of our fruit, but also for our innovation, fruit availability and first class service. Simply put, I want Del Monte to be acknowledged for who they are – the fruit experts.
Del Monte's UK arm has undergone some reorganisation during the last few months. What have been the main reasons for this and how has this helped the company face up to the challenges of the UK fresh produce market?
JH: Every business changes and adapts to meet the needs of the market in which it operates. Del Monte UK is no different, we will continue to adapt and re-organise to meet the future needs of our customers efficiently.
What impact has the closing of the banana contract with Asda at the end of February had on Del Monte's UK operation?
JH: Choosing not to serve Asda at the price on offer has allowed us to re-organise our banana division. Once finished, we will end up with half the number of facilities but only slightly less ripening capacity. The simplified structure will allow us to be reactive to our customer’s needs in a cost-effective way. This, combined with the quality of our fruit and great service levels – we averaged over 99 per cent on service levels performance measured in quality and condition for the final three years of serving Asda – is a compelling proposition for the major retailers.
You still supply the vast majority of Asda's pineapples – is there a risk that Asda's desire to source more of its fruit directly might result in the loss of some of this business?
JH: When Asda talks to us they are talking to the grower, they are buying direct! Following our acquisition of Caribana, we are now the largest pineapple grower in Costa Rica.
I understand that very few players in the UK banana market are making a decent profit at present. How is Del Monte coping with the current trading situation?
JH: This was one of the reasons we decided not to keep on reducing our price when re-tendering for Asda. The mischief-makers in the industry keep on spreading rumours that this is a sign that Del Monte is withdrawing from the UK market, but this is absolutely not true.
The irony of the situation is that we have temporarily reduced our activity in the UK banana market at a time when other suppliers appear to be buying business, just as costs have increased. I await with interest to see their financial results for the year. It’s important to note that some of our competitors do not have the benefit of the financial strength that Fresh Del Monte Produce Inc enjoys.
We heard earlier this year that new investments in facilities might occur this year. Do you have any further news on this?
JH: We’ve invested heavily in the past; only just recently we spent nearly £1m on upgrading our York facility, which passed its recent audit with flying colours. Our three-year ambition to be the partner of choice will be underpinned with investment, capital or otherwise, as required.
How do you see the UK fresh produce market at present? What concerns do you have about things like inflation and consumer spending in the current economic climate, and what positives do you see in terms of how demand for fresh fruit is developing?
JH: The economic environment has changed and the markets are going through a period of correction; prices are already increasing and I believe they will increase further before settling down again. The retailers have been sending out the message of no price increases and nobody wants to pay higher prices – after all, we are all consumers.
The fresh produce supply chain is now very efficient, lean and working on slender margins, which makes it difficult for them to find further efficiencies sufficient to off-set increases in the costs of raw material and fuel. However, a fair price has to be paid to ensure we maintain a sustainable supply chain that is able to innovate and deliver the choice and quality demanded by the consumer.
Increasing prices under the current climate is a fair and reasonable thing to do and suppliers should not be afraid of raising the subject with the customer. Companies with the financial strength to do so will cope with the difficult economic conditions much better than the weaker companies, some of whom I expect will go out of business.
We’ve researched consumer behaviour during a recessionary period and found that people tend to reduce their spending on white goods and eating out but compensate by treating themselves when eating at home. The consumer is now much more health conscious and I expect that trend to continue. The ideal situation is to continually offer them variety with something that is healthy but has an element of indulgence, so that’s what we’re working on.
Fresh-cut and salads are now a major part of Del Monte's business in the UK. Presumably these are areas that the company thinks are likely to grow further in the future – what signs do you see in the market to confirm this?
JH: Absolutely, particularly fresh-cut. We anticipate continued growth from the recent healthy eating trend, but it will be less pronounced than in the past. The market needs product innovation in order to repeat historical growth rates. Product innovation is a priority for Del Monte and something we will be talking with our customers about in the near future.
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